Sewer rate increase process initiated

Expenses, revenues for new Martinsburg treatment plant to determine rates

March 19, 2013

MARTINSBURG - Martinsburg officials have begun the application process to increase the city's sewer rates to pay for a new wastewater treatment plant that will comply with strict new pollution limits issued by the U.S. Environmental Protection Agency.

At their meeting Thursday, City Council members approved a contract with CoxHollidaPrice LLP to complete an accountant's report of the city's sewer department through June 30, 2012.

The report is required by the West Virginia Public Service Commission for the rate application.

Council members approved up to $17,000 for the report plus an hourly rate if the accounting firm must testify before the PSC during its rate hearings. The vote was 5-2. Councilmen Donald Anderson and Gregg Wachtel voted no.

CoxHollidaPrice will analyze the sewer department's revenues and current expenses, City Manager Mark Baldwin explained.

The analysis will then figure the future expense of paying for the new sewer treatment plant based on an estimated 20-year bond for $33 million at 3 percent interest, he said.

Also, the analysis will take into account the operation and maintenance of the new plant plus personnel costs to run it, he said.

Some future expansion projects will be factored in as well, he said.

Based on those numbers, the rate needed to pay for and operate the new plant will be established, which is what the city will submit in its rate application to the PSC, Baldwin said.

The application is expected to be submitted before the end of June.

The total estimated cost of the new sewer plant is $49.7 million.

The city also is expecting to get a grant through Senate Bill 245. SB245 was passed by the state Legislature in 2011.

It sets aside $6 million a year for 30 years in surplus lottery revenues to help pay for construction and improvements to several sewer plants throughout the greater, eight-county Eastern Panhandle to meet the EPA's stringent new pollution limits for sewer treatment plants in the Chesapeake By watershed.

The Eastern Panhandle is in the Potomac River watershed. The Potomac is one of the bay's major tributaries.

How much money will be available through SB245 has not been determined. It could amount to between 35 and 45 percent of the new plant's cost.

The more money the city can obtain through a SB245 grant, the less it will have to borrow and, therefore, the less the rate will have to be increased. City officials estimate getting $16 million in SB245 funds to calculate how much money will have to borrowed to build the sewer plant.

Preliminary estimates are for Martinsburg's sewer rates doubling at the least and tripling at the most, officials have said.

Now, the city's minimum rate is $14.46 per 4,000 gallons per month.

The city also provides sewer service to the Wheatland subdivision. The minimum rate for Wheatland customers currently is $23.44 per 4,000 gallons per month. That rate would be increased to match the city's other rate.